The Canada Revenue Agency (CRA) has confirmed an increase in TFSA contribution room to $6,500 for 2023.
Did you know that the contribution limit is reviewed each year by the CRA based on inflation, and then rounded to the nearest $500? Low inflation rates in recent years are the reason why the limit has remained at $6,000 for so long.
Since inflation this year is high, it provides a significant impact in setting the cap, sufficient to raise it. Furthermore, based on the latest inflation forecasts, the odds of the limit rising to $7,000 by 2024 are excellent! To be continued...
Who would have thought that inflation would generate sales opportunities!
For clients who are closely monitoring market conditions to take maximum advantage of the upcoming market rebound, this is great news!
However, many might have the following thought:
"What good are these increases in contribution room if my client is struggling to fill their TFSA or has never contributed before?"
The answer is simple: Unused contribution room is never lost; it accumulates! Including the year 2023, if your client was aged 18 or more in 2009 when the TFSA was created, they have $88,000 in contribution room. If they don't have the liquidity this year to make all or part of their contribution, they can add to their room next year.
Have a great 2023 RRSP/TFSA campaign! To learn about all your tools and the details of the client contest, click here.
